LUBBOCK, Texas – A bankruptcy judge on Tuesday authorized Reagor Dykes to borrow up to $1 million from McDougal-Dykes-Ewing or Bart Reagor and Rick Dykes in an interim order. Reagor Dykes was also authorized to borrow up to $3.75 million from International Bank of Commerce.
It is an interim order, still subject to change before it becomes a final order. There had already been an emergency order allowing Reagor Dykes to borrow and pay for immediate expenses. The interim order does not force anyone to lend money, but instead authorized Reagor Dykes to request the loans in the form of “debtor-in-possession” post-petition accounts.
In short, “debtor in possession … post-petition” means the money is accounted for separately from the assets and debts that happened before Reagor Dykes filed for bankruptcy.
The new post-petition loans would get priority status except for $900,000 of professional fees.
A hearing on Wednesday afternoon will include a discussion of the interim order.
As of the time of this report, it is not clear if McDougal-Dykes-Ewing will continue to sponsor a Chapter 11 bankruptcy reorganization plan for Reagor Dykes. The matter is complicated by a ruling from the judge on January 17 allowing both Ford and Toyota to stop doing business with Reagor Dykes. Ford was allowed to withdraw its cars and trucks from the Reagor Dykes dealerships.
Without cars and trucks and without a specific kind of financing called a “floor plan” it is not clear how McDougal-Dykes-Ewing could take ownership or management of the various dealerships.
As a condition of borrowing the money, Reagor Dykes would be obligated “to obtain confirmation of a plan of reorganization in form and substance approved by IBC Bank on or prior to May 1, 2019”
A proposed plan submitted earlier this month was criticized by the judge in his January 17 order allowing Ford to walk away.
The judge at that time wrote, “Reagor-Dykes does not have a ‘reasonable possibility of a successful reorganization within a reasonable time.’” However, the judge encouraged Reagor Dykes and Ford to keep negotiating. And the new interim order seems to invite Reagor Dykes to keep trying to come up with another plan or an updated plan.
Reagor Dykes filed for bankruptcy on August 1. The company was accused of default and fraud.
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CLICK HERE to read the January 17 order concerning Ford.
CLICK HERE to read the January 17 order concerning Toyota.